Indian commercial banks can actually provide banking services to traders and companies that trade cryptocurrencies, the nation's central bank clarified last week. "As of today, such a ban does not exist," said the Reserve Bank of India (RBI) on May 22.
The statement came in response to a report submitted by BV Harish, co-founder of the Unocoin cryptocurrency exchange, called the Right to Information (RTI) Act.
After almost three months the RBI finally clears up
As reported by The Economic Times on Tuesday, the RTI was filed on April 25, in order to clarify whether banks were still prohibited from providing services to Investors cryptocurrency and service providers despite a recent Supreme Court ruling.
On March 4, the Supreme Court of India quashed a Reserve Bank of India (RBI) order dating back to April 2018, which prevented banks from providing services to cryptocurrency institutions.
The RBI initially planned to file a review petition that would challenge the Supreme Court verdict, as it reportedly seemed that trading in virtual currencies would put the country's banking system at risk.
In the end, the central bank did not present the petition, but neither did it clarify the issue of cryptocurrency trading and taxation. As a result, both banks and the cryptocurrency industry have been left in confusion.
“Since the Supreme Court decision, many crypto companies have started to resume their operations by opening banking channels. However, many banks remained in the dilemma as to whether to offer their services to companies or individuals in the crypto sector or not, as there has been no circular from the RBI ordering the lifting of the ban, "said Ashish Singhal, CEO of the cryptocurrency exchange CoinSwitch.co.
Meanwhile, Nischal Shetty, founder and CEO of the Mumbai-based cryptocurrency exchange, WazirX, said: “While the Supreme Court ruling had made clear that there are no obstacles in the banking system for cryptocurrency activities, 'RBI at the RTI depot is very welcome. There was confusion among many banks despite the Supreme Court ruling because these banks were waiting for directives from the RBI. "
A new boost to the Indian crypto sector
However, the exchanges seem confident that the RBI clarification will accelerate the growth of the cryptocurrency sector in India. "We hope this response will clear up the confusion of the banks and bring clarity to the crypto community in India, which has shown steady growth since March," said Singhal.
Shetty said he expects all banks to start serving cryptocurrencies without any restrictions. Some exchanges have already experienced solid volume growth in the past two months. Mumbai-based CoinDCX, a cryptocurrency trading platform and liquidity aggregator, saw a 150% growth in daily active users only in March, said CEO Sumit Gupta.
